In its effort to be recognised as a wealth tech startup rather than a cryptocurrency-centric company, CoinSwitch Kuber will likely allow its 18 million customers to invest in US stocks and even facilitate mutual fund investments by the end of the current year, co-founder and CEO Ashish Singhal said in an interview. Other products like a stock trading platform, fixed deposits (FDs) are also in the pipeline but will be launched later, Singhal added.
The decision to diversify comes at a time when regulators around the world have been cracking down on cryptocurrencies, pushing them in the red. So far this year, the market value of major tokens like bitcoin and others have been wiped off by about $2 trillion. The Sequoia-backed company also reported a loss in FY22. The startup hopes to turn in profit in the next two-three years, Singhal said without giving specific numbers for FY22 as they were not finalised yet.
CoinSwitch had reported a revenue of `71 crore in FY21, up from Rs 13 crore in FY20, which helped its profit jump from 6 crore in FY20 to `24 crore in FY21.“Crypto investors are very young and can take the volatility risk right now, but over time, as they mature, we want to move them to the next asset class over their life cycle – which is the primary driver for our expansion into the wealth tech space,” Singhal said, adding that the average age of investors on his platform currently was about 25 years.
“Crypto, no matter how good it is, has its limitations. It is very risky. An investor wouldn’t park more than 5% of his investments into crypto — there is a bigger white space of 95% of alternative asset classes which is unsolved and we want to address that by providing alternative asset classes,” he added.Over the next three years, the company aims to serve every asset class on its platform and transition its users to over two asset classes each with an attachment rate — across categories — to be around 40%.Analysts at Redseer expect the number of investors — apart from the ones who invest in core banking products — will double from 50 million to about 100 million by FY27 while highlighting that the industry is relatively new and has space for new players to enter but requires innovation.
“Remember, making money selling mutual funds is not happening, it’s a bad monetisation product but is essential to retain the customer. Equities can be good only if the volumes are high. Overall, the incremental revenue from diversifying into a wealth tech platform can be quite significant but companies need to broaden their offerings,” a Redseer analyst said.Echoing that view, Singhal added, “On the retail side of stocks, mutual funds the opportunity for revenue is very less…we want to increase the overall customer base so it’s easier for us to cross-sell and upsell the different asset classes to users.”Analysts added that new-age companies in the country are picking up global themes.
“Art investments, peer-to-peer (P2P) lending, working capital finance, products that help parents teach their kids how to invest are the key emerging themes in India’s wealth tech industry that have better monetisation prospects as opposed to the traditional products,” the Redseer analyst added.Investors in the space said they were also eyeing startups that offer portfolio management services (PMS) for regular white collar employees, not limited to just high net worth individuals (HNIs).
There are several players like Smallcase, Dezerv in the space which provide robot-based advisory services according to age and other demographics of investors.The wealth tech industry in India is expected to grow 3X from $20 billion in FY20 to $63 billion in FY25 with several players like Paytm Money, PhonePe, Groww, Zerodha, Wint Wealth, INDmoney, among others.
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